Pinterest, Fab.com and The Rise of Social Commerce

It’s hard to pick up a paper of any kind (WSJ, NYTimes…) without reading a story about the rapid rise of Jeremy Lin and/or Pinterest.  Interestingly, they are currently generating about the same amount of Google searches:

It shouldn’t be surprising to learn that there are whole boards on Pinterest, dedicated to Jeremy Lin. They’re, as the puns continue, referred to as Linterests.

As remarkable as any graph I’ve seen over the last two years is the Alexa chart on Pinterest, which is undoubtedly, the fastest growing website in history.

Pinterest is now the 18th most trafficked site in the U.S. per Alexa.  Another milestone reported last week was the fact that Mark Zuckerberg (Zuck on Pinterest) had joined the site.

While much credit is due to the founders and employees of Pinterest for creating such an enormously useful and engaging site, Pinterest is clearly a reflection of the times, of the rise of what I call “The Social Internet“, and what is more broadly referred to as the rise of social, mobile and cloud.  Now that more then 800 million people are on Facebook, and another 100mm use Twitter regularly, cool new sites can spread like wildfire .  With more then 1.2 billion mobile web users worldwide, people can add pins to their boards on Pinterest or view pins 24/7.   We almost never hear of Pinterest being down, other then for scheduled maintenance, because Pinterest can leverage cloud computing to seamlessly handle the meteoric growth of its computing and storage needs.   And it’s my bet, that Pinterest will not be the fastest growing website for long.  Something else newer and cooler will come along in 2012, to better leverage the increasingly connected and mobile web.

Yet, as pervasive as social media sometimes appears to be in terms of driving discovery, it still pales in comparison to the King of Discovery of the first the siloed internet…Google.  Google crushes Facebook by more than a 5-1 margin in terms of driving traffic (i.e. being the upstream site) to the Top 25 U.S. e-commerce sites (per Internet Retailer):

If social is so great for discovery, why doesn’t it drive more commerce?   The answer is because Internet commerce is dominated by offline companies that are still trying to get the First Internet, the siloed Internet, right.  The only pure internet companies among the Top 25 internet retailers are Amazon, NewEgg (an online retailer of computer hardware and software) and Netflix.  Of those, only Netflix gets social, (with 11% of Netflix’s traffic coming from Facebook), in part, because they’re the only internet retailer based in the Valley.   The only other Top 25 Internet retailer over 10% is Victoria’s Secret, and that’s, in part, because the fashion industry is on the leading edge of social media (a fact which doesn’t appear to help The Gap).

It’s amazing that even today, Amazon sells more online then Staples, Apple, Dell, Office Depot, Walmart, Sears, and QVC…combined.    That’s because Amazon started out as an Internet company, the Internet is at the core of Amazon’s DNA.  Walmart put a “.com” at the end of its name, and opened up Walmart.com (a remarkable six years after Amazon launched), but that didn’t make Walmart an INTERNET company.   All the Internet spoils went to Amazon.  Walmart didn’t go away, it just grew at a slower rate as retailing slowly started to migrate to the web/Amazon.  Thus Walmart didn’t create the massive shareholder value that Amazon did (Walmart’s share price is lower than its peak reached more than 12 years ago!).

Just as it took Amazon to lead the way in e-commerce, it’s going to take a Second Internet company to lead the way in social commerce.  It’s going to take a company BORN social, with social at the core of it’s DNA.  I’ve been waiting for that company, and it’s finally arrived…. Fab.com.  Fab is one of the great pivots of all time.  The pivot story is a must read, and can be found on here.  Fab was born social, has social at the core of its DNA.  It just feels social when you visit Fab.

But the proof is in the pudding, in where it derives its traffic from, and I believe Fab to be the first e-commerce company of scale (reportedly at a $100mm+ run rate) to have more traffic driven by Facebook than by Google.

This shift in commerce discovery is a REMARKABLE sea change in how commerce happens on the Internet.  We are witnessing a monumental moment in time, not unlike when Amazon ushered in the original era of online commerce.  And Fab isn’t alone.  8thBridge calls this period eRetail 2.0, and highlights the 10 companies below as leading the way:

The future of social commerce is clearly here today.   It’s still the top of the first inning, but all the recent articles about commerce on Facebook not working, are missing the point, most in the mass media simply don’t appreciate how The Social Internet works, and most have likely never heard  of Fab, or Birchbox, or any of the sites in the graph above.  And while Facebook is at the center of the Social Internet, massive levels of social commerce will be also driven by Twitter, YouTube, Tumblr, and most definitely Pinterest.

While Fab leads the way on Facebook, Fab isn’t leading the way on Pinterest.  ModCloth, a site for vintage and retro clothing that describes itself as “an online clothing, accessories, and decor retailer that aims to provide a fun and engaging shopping atmosphere for you, our customer” has the highest amount of it’s traffic coming from Pinterest of any site I could find:

I can’t wait for the Second Internet site that’s going to grow even faster than Pinterest, and see what new fortunes its spawns.  It’s the dawn of a new era, we are witnessing The Rise of Social Commerce.